In an effort to provide investors an alternative way to execute their trading, NYSE Euronext was granted permission by the U.S. Securities and Exchange Commission (“SEC”) to introduce its innovative Retail Liquidity Program (“RLP”). NYSE plans to kick start the first-of-its-kind program early next month.
Despite the dissatisfaction expressed by many brokers in the industry, SEC believes that RLP will promote healthy competition across trading platforms. It is also in line with the regulatory norms and is designed to benefit investors by offering them a competitive price.
RLP will allow shares to be traded separately even before it is available for trading on the New York Stock Exchange (“NYSE”) floor. This technology would allow sufficient cost savings and ensure better pricing with respect to retail equity trading for NYSE and NYSE MKT listed and NASDAQ UTP-traded equity securities.
A couple of new market participants would be provided on NYSE and NYSE MKT. Firstly, the RLPs are slated to provide price improvements, even if its more or less by a penny, combined with services delivered towards Retail Member Organizations that are responsible for submitting Retail Orders to the Exchange.
With the introduction of RLP, NYSE will become the only U.S. bourse to offer such technology, comfortably outpacing its closest peers like Nasdaq OMX Group Inc. (NDAQ - Analyst Report) and CME Group Inc. (CME - Analyst Report).
NYSE continues to maintain a leadership position by developing a market model in response to the emerging trends and technological advancements in the trading environment. The company has initiated several undertakings by expanding the suite of technology service offering to its clients and aiding in a strategic shift of companies from other exchanges to the NYSE trading platform and also provided transparent pricing, useful trading information and the ability to develop cutting-edge products in the future.
NYSE currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. However, we maintain a long-term Underperform rating on the shares of the company.